Projects That Have ________ Are Often Rejected by Traditional Discounted

question 4

Multiple Choice

Projects that have ________ are often rejected by traditional discounted cash flow models of capital budgeting.

• A) long lives
• B) cash flow returns in later years
• C) high risk levels
• D) all of the above

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Definitions:

Cash Budget

An estimate of cash inflows and outflows over a specific period, used to manage and plan for cash needs.

Minimum Cash Balance

The lowest amount of cash that a company aims to maintain in its accounts to adequately meet its operational and financial obligations.

Borrowing

The act of obtaining funds from a lender under the agreement to pay back the principal amount along with interest or other charges.

Inventory Levels

The quantities of goods and materials a company holds for the purpose of resale or production at any given point in time.